Pay As You Sell Offers a More Flexible Approach to Insurance


Ecommerce has come a long way since its early days, as the digital revolution has allowed for revolutions in the way we sell and buy. Now, that innovative spirit has hit the insurance market. Insurance start-up Spott has rolled out a new liability insurance model: Pay As You Sell (PAYS). 

Historically, liability insurance premiums have been based on projected sales, an approach that meant companies could face mounting costs if revenue dropped significantly. But the granular level of data generated by eCommerce in real time has allowed Spott to create a system whereby companies will only pay insurance based on their real-time revenue, not hypothetical projections. 

So what exactly is Pay As You Sell insurance? 

PAYS insurance is standard liability insurance, with an eCommerce twist. 


Ecommerce is arguably the success story of the century, and is only set to get bigger. Some analysts predict that eCommerce will experience 56% growth by 2026, taking total spend to a staggering $8.1 trillion a year. 

With so many products of all descriptions being sold online – many of which are  manufactured at home or in small cottage workshops with no real industry standard – marketplaces like Amazon and Etsy are increasingly concerned that they and their sellers are properly insured against liability claims. Within the last year, Amazon updated its terms to require all sellers who reach a $10,000 threshold within any one calendar month to hold liability insurance, protecting against claims for bodily injury or property damage in relation to their products.  

But the standard model of liability insurance isn’t well suited to eCommerce, which can be far more dynamic than the brick and mortar model. As the name suggests, PAYS insurance offers dynamic pricing to match dynamic commerce, allowing eCommerce sellers to peg their insurance premiums to their revenue in real time. It comes with a guarantee that sellers will never pay more than the alternative full payment model, allowing sellers to better manage their cash flow.

Many eCommerce sellers work on razor thin margins, so even a small drop in revenue can see their balance sheet tip into the red with fixed overheads such as regular insurance payments. PAYS allows the payments to drop with revenue – or even be put on hold altogether if no sales are made – allowing eCommerce sellers more flexibility in the way they sell. 

An innovative, data-driven approach

This innovative model is made possible due to the data generated by eCommerce way When sellers sign up for insurance via Spott, their online store is connected to Spott’s AI program, allowing for sales data to be collected in real time. It’s an approach which represents a distinct break from traditional insurance accounting, wherein premiums are based on sales forecasts for the year ahead. The classic approach clearly has two distinct disadvantages: sellers can end up overpaying if their sales fall short of predicted revenue, or conversely can be left with inadequate insurance if their sales vastly outpace predictions. 

But just as eCommerce has revolutionized sales and advertising thanks to the amount of hard data it generates, so it is now set to change the insurance landscape. 

Every time a customer makes a purchase from an eCommerce store, useful data is generated, including the product sold, product category, sales price and more. That data can be used to define the store’s actual risk in real time. That means no more guessing at likely revenue – and no more best guess premium quotes. 

Who is PAYS best for?

The data requirement means that this flexible approach to insurance is and will remain the preserve of eCommerce companies, making eCommerce an even more enticing prospect for potential retailers than it currently is. 

When selling online, there is no limit to the size of company that PAYS can be used for.  all eCommerce sellers, from moms earning extra money with a side hustle from their kitchen table, all the way up to multi-million-dollar eCommerce empires, will be able to pay for insurance only what they need on a month-by-month basis, with premiums rising and falling along with their revenues. 

Due to its dynamic nature, PAYS is best suited for smaller companies, whose revenues may vary considerably month to month, and also for seasonal sellers. After all, why pay full price for insurance during your down-season? This makes PAYS a real boon to sellers who are just getting started in the eCommerce world, and who may have a few false starts on product selection before finding what works for them.

Ultimately, by taking the risk of overpaying for premiums out of the insurance landscape, PAYS is set to be a game-changer for the eCommerce industry, further fortifying it against the usual uncertainties that come with starting a retail business. And that can only be a good thing for retail, and for the economy.